Archive for the ‘strategy’ Category

Wicked, Wicked IT Strategy Problems

Thursday, September 18th, 2008
Some IT problems can't be solved - these are wicked problems.

Some IT problems can't be solved - these are wicked problems.

Some problems just can’t be solved. As an IT guy with an engineering background, I find this hard to believe – it goes against my grain. I mean, back in school I encountered lots of problems that at first blush appeared to be impossible to solve. However, once I had gotten a little deeper into whatever class I was taking at the time things started to become more clear. New tools that I had learned could be used to solve what had previously appeared to be unsolvable problems. In the world of IT, the IT department can even help keep a company out of an economic stall and so I though that there was no problem that an IT department couldn’t solve. It turns out that real life is not nearly so neat.

Dr. John Camillus has spent the past 15 years studying how companies create their own strategies. During this time he has uncovered what he likes to call “wicked” business problems – strategy issues that are difficult because our traditional processes for solving problems just can’t resolve them. IT departments face these types of problems internally as well as facing them as part of a company’s overall strategy planning process. Wicked problems can be especially trying for IT departments because they seem to resist being solved by our standard techniques of gathering more metrics, revisiting the core issues and creating a more detailed definition of them, or even the time honored technique of breaking the big problems that we can’t solve down into smaller problems that we hope that we can solve. Dr. Camillus says that not only do our traditional ways of dealing with problems not work on wicked problems, but they can also make things far worse.

Dr. Camillus recently wrote an article for the Harvard Business Review in which he discussed wicked business problems. In it he stated that organizations, like an IT department, will most likely encounter a wicked problem when they are facing either a period of constant change or have encountered challenges that are bigger then they have ever seen before. Within an IT department, it won’t just be the technological complexity that make a problem a wicked problem, but rather all of the social issues that come along with it that will turn it into a wicked problem.

How can you tell if your problem is a wicked problem? It would be nice if wicked problems came labeled as such. However, they don’t. Having the ability to identify a wicked IT problem early on can save any IT leader a significant amount of time and grief. You won’t be able to tell just by looking at the problem itself, but rather you have to take a look at what surrounds the problem. Specifically, if a problem is causing confusion, discord among your IT team, and there has been a distinct lack of progress in creating a solution for it so far, then there is a good chance that you are looking at a wicked problem.

Just to make sure that you really do have a wicked problem and not one of those more common really, really hard IT problems, there are some additional criteria that you need to check before you can call an IT problems a wicked problem:

  1. Too Many People Are Involved: A problem that has too many people who are impacted by it starts to look like a wicked problem very quickly. Each person who has a different vested interest and is working on a different set of priorities will contribute to making a difficult problem into an unsolvable wicked one.
  2. The Cause Of The Problem Is Not Clear: There is no single cause for the IT issue that you are dealing with. Generally there are multiple sources that have fed the problem including competition, issues with employees & staffing, company strengths that have become decrements, and a traditional domestic vs. international focus can also compound the problem.
  3. The Problem Is Shaped Like A Blob: This is an especially tricky characteristic to deal with – the problem seems to change shape everytime you try to deal with it. This makes it hard to “get a grip” on the problem and so you may not have any idea as to where to start.
  4. You’ve Never Seen Anything Like This Before: How can you solve a problem that doesn’t look like any other problem that you’ve ever seen before? When you face a problem that you’ve never seen before, the question of what tools or techniques to use to solve it becomes even more critical.
  5. There Are No Signs Showing You The Right Direction: Most problems come with some sort of indication of what the correct next thing to do in order to solve it is. However, wicked problems have no such indicators. You are truly on you own here.

So what’s an IT leader to do once he/she has spotted a wicked problem? One key thing that Dr Camillus has learned is that wicked IT problems can not be solved. Instead, you need to find ways to mange them. How to do that is what we’ll talk about next time…

Have you encountered any wicked IT problems? Did you know it was going to be a wicked problem right off the bat or did it take awhile to discover this? What did you do about it? Were you ever able to solve it or does this problem still exist? Leave a comment and let me know what you think.

What Can IT Learn From How Chrysler Makes Cars?

Wednesday, August 13th, 2008

What lessons does how Chrysler creates cars have to teach IT departments?

Although working in IT can be a tough job at times, I must confess that working in the American car manufacturing industry sure seems like it is probably a much rougher place to work right now. I’m always interested in what’s going on in the car biz because once upon a time I almost ended up going to the General Motors Institute (now known as Kettering University) and probably would have ended up going to work in the car industry.

We’ve talked before about what IT management can learn from the people who brought us the subprime mess. Now it’s the good folks at Chrysler are starting to do some interesting things that have caught my attention and I think that they may now be in a position to teach us something. First, just a bit of background information for anyone who hasn’t been keep up with current events. The private equity firm Cerberus Capital Management bought Chrysler for about $7.4B just about a year ago. What this means is that Chrysler is no longer a publicly traded company – Cerberus can do pretty much whatever they want and don’t have to answer to anyone. Except the people who put up the $7.4B. Who want to see a return on their investment as quickly as possible.

So why did Cerberus buy Chrysler. In short, they think that they can do a better job of running Chrysler than the previous management did. If they are correct, then they can make the company profitable and take it public and make much more than $7.4B. The trick is to do this as quickly as possible. If they can’t pull this off, then they could end up shutting Chrysler down and just walking away from their $7.4B investment. Got that? Ok, so now we move up to current time. Robert Nardelli is the CEO of Chrysler and he was brought in from after being the CEO of The Home Depot. What this means is that he’s not a “car guy” and he’s not limited in his thinking by how things have been done in the past.

Last week new stories started circulating about Chrysler having talks with Nissan about partnering to jointly produce midsize cars. This is a possible fundamental shift in how Chrysler makes and sells cars. Basically, Nissan would design, engineer, and manufacture the cars and then Chrysler would sell them under their own name. This could save Chrysler the billions of dollars that it takes to create a new car. Not content to put all of its eggs in one basket, Chrysler has also entered into a partnership with China’s Cherry Automobile Co. who will be making small cars for them.

News reporters were quick to point out that this model has worked well for others such as Dell and Nike who really don’t do engineering and manufacturing, but rather focus on marketing and selling. This approach has been tried in the auto industry before; however, these efforts have not panned out well for a number of ill defined reasons.

So what does this all mean for IT executives? Perhaps it’s time to slay some of our sacred cows and stop doing software development and stop doing routine support activities. Instead, perhaps these activities should be completely outsourced and our IT shops should retool to focus on what we should be doing best: supporting the business. Specifically, if like Cerberus we would be motivated by the need to have the business turn a profit quickly, we could focus on working with the business units and try to understand what their issues are and how IT tools and technology can be used to solve these problems.

What would happen if Cerberus took over your IT shop? Just imagine if the job of an IT shop was to create very detailed product requirements and to perform testing on products that were created based on those requirements. Can you imagine just how close the IT shop could get to the business? The invisible wall between IT and the business side of the house would come crashing down. When old ways of doing business (“everything is invented here”) are torn down and replaced with new ways (“we focus on only what we do best and outsource everything else”) then that can truly transform the way IT does business.

Tell me what you think. Do you think that an American car company has lessons to teach IT shops? Is the concept of having a private equity firm run your IT shop something that fills your heart with joy or fear? Leave me a comment and let me know what you think.

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IT Driving Lessons: How To Avoid A Stall

Saturday, August 9th, 2008

Just like for airplanes, stalls can be deadly for a company

Once upon a time in my career I had a chance to work on a fighter jet program. Talk about your ultimate IT project! During this time I learned a great deal about planes and how they work. I finally realized why during airshows a stunt airplane will often start going very fast and then pull up into a straight vertical climb – it turns out that this is very hard to do. If the pilot can’t keep the plane going fast enough, then what you’ll see is the plane start to shudder, come to a complete stop, and then the nose will pull to one side and the plane will start to hurtle towards the ground. This is all great stuff for an airshow; however, it can be disastrous for a company.

A revenue growth stall can cause even the strongest, most high flying company to come crashing down. A perfect example of this is the jeans company Levi Strauss & Company. Back in 1996 business was going gang-busters. Their sales had just popped over $7B and things were looking great. Then it stalled. By 2000 sales were only at $4.6B (down by 35%).

Not to pick on Levis Strauss. The same stall has hit Apple, Caterpillar, 3M, Toys “R” US, etc. Why should we care if we don’t work for these companies? Ultimately IT needs to be the lookout that is in the crow’s nest of the company and is able to detect a stall before it overtakes the company. If we are unable to do this critical job, then there is a good chance that we’ll have confirmed that IT just doesn’t matter any more.

Why are stalls so deadly to a company? Since things are going so very well just before a stall hits, many companies, just like an airplane in an air show, are actually accelerating as they enter a stall because all of the metrics that they normally use to tell them how things are going are telling them to spend, spend, spend. Senior management often never sees the stall coming.

How bad is a stall? Some very smart guys over at the Corporate Executive Board (Matthew Olson, Derek van Bever, and Seth Verry) have done some research and what they’ve uncovered is that companies lose about 74% of their market capitalization (measured against the S&P 500) in the 10 years after the stall. Of course, the CEO and his/her senior team are replaced (hear that CIOs?).

Why do companies stall? If stalls were unavoidable then there would be little for CIOs to do except to prepare defensive strategies. Research has shown that most stalls are a direct result of choices that a firm’s senior management makes about either strategy or the design of the organization. What is even more damning is that 50% of the identified root causes fall into one of 4 categories:

  1. Being held captive by a premium position.
  2. A failure in the management of innovation within the company
  3. Abandoning a core market or product too early.
  4. Talent Management failures.

What’s a CIO to do? We’ll take a look at each of these four root causes and provide some suggestions on how the CIO and the IT department can make sure that the firm doesn’t get stuck in a stall that all to quickly turns into a death spiral.

Have you every worked at a company where things switched from being great to being horrible overnight? Why did this happen? Did your IT department play a role in causing the problem or did they help the company restart its engine? Leave a comment and let me know.

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Can Microsoft Profit From Having Steve Ballmer Take Total Control?

Tuesday, July 8th, 2008

Steve Ballmer Now Runs Microsoft

The news is a bit old by now; however, it’s still a big deal that Steve Ballmer has finally taken full control of Microsoft now that Bill Gates has officially stepped down. I believe that Microsoft employs over 100,000 staff and so Steve has got his hands full trying to find a way (or ways) to once again make Microsoft more agile. Hopefully Steve will be able to sort out what path he wants the company to follow: strategy, quality, or innovation.

What would you do if you were in Steve’s IT shoes? Microsoft has a fundamental dilemma: are they one huge company (a la Wal-Mart) or are they a loosely connected set of business units (a la GE)? The key point to remember here is that Microsoft is neither a Wal-Mart nor a GE so whatever path they take, they will need to create their own unique structure.

In terms of major projects, the next release of the Windows operating system cannot happen quickly enough. No matter what you think of Vista, the public perception of it is that it is undesirable. Steve can put his best people on it and see if he can turn this perception around or he can simply quickly release the next version and consider Vista a horrible learning experience.

Next Microsoft still seems to be interested in getting into the mobile phone market. I’m not sure if this is simply a case of “We can do whatever Apple can do…” or if they really see it as a key pillar of their growth. No matter what, they need to put some creative talent onto this one. They’ve got a powerful lever in the Exchange email tool — if they can build on that, they could have a leg to stand on.

Finally, Steve has got to realize that the Internet is all about search. Right now it looks like he’s still maneuvering to get a piece of Yahoo’s search business. Perhaps what he really should be doing is looking further out and finding out where Google is NOT the dominate search engine and spend some of those Microsoft R&D dollars to attack Google from the outside instead of going head-to-head with them.

No matter what, Steve will be kept quite busy for the foreseeable future. Since I use products made by his company, I hope that he makes some good decisions. Buy or sell your Microsoft stock based on how you think he’s going to do!

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